Demographic Shifts: Economic Impact on Generations

Our world is on the cusp of a profound transformation, driven by sweeping demographic changes that will redefine economies for decades to come.

The economic landscape is shifting in ways that demand our attention and action.

These shifts are not just numbers; they represent real lives, aspirations, and the future of global prosperity.

The Rising Tide of Generational Change

As populations age and younger generations come of age, we face both opportunities and obstacles.

Understanding these dynamics is crucial for navigating the coming years with resilience and hope.

Core demographic trends are reshaping everything from labor markets to consumer behavior.

• Gen Z is projected to become the largest generation globally by 2035, comprising about 30% of the population.
• Women are increasingly participating in the workforce and accumulating wealth at unprecedented rates.
• An estimated $124 trillion in U.S. wealth will be transferred through 2048, marking a historic shift.

These trends signal a new era of economic influence and responsibility.

Gen Z: The New Economic Powerhouse

Gen Z's economic rise is nothing short of dramatic, with their global income set to soar.

By 2035, they are expected to amass $74 trillion, nearly double the figure in the next five years.

This generation's spending power is projected to reach $12.6 trillion by 2030, up from $2.7 trillion in 2024.

However, this comes with unique financial challenges that cannot be ignored.

• Their spending-to-savings ratio hit 1.93 in February 2025, meaning they spend nearly twice their savings.
• Key expenses like childcare have risen dramatically, reflecting changing family dynamics.
• Despite wage growth of nearly 8% year-over-year, financial pressure remains intense for many.

This contrast between income and savings highlights a need for better financial strategies.

Women’s Ascendancy in the Economy

Women are poised to reshape the economy through increased workforce participation and wealth accumulation.

The gender gap in income growth is narrowing, with differences falling to around 4% by late 2024.

Women today enter this transition with substantial advantages, including higher education and financial literacy.

Globally, women now hold 29% of senior management roles, and one-third of business owners are female entrepreneurs.

This empowerment is set to accelerate with the Great Wealth Transfer.

• Of the $124 trillion transfer, $54 trillion will go to surviving spouses, mostly women.
• Another $47 trillion is expected to benefit women in younger generations.

This shift promises to enhance economic diversity and innovation.

The Great Wealth Transfer: A Paradigm Shift

The transfer of $124 trillion in U.S. wealth through 2048 exceeds the global GDP for 2023, which was $105 trillion.

This monumental shift will primarily benefit women and younger generations, altering economic power dynamics.

Wealth inheritance patterns are changing, with significant implications for retirement systems and social contracts.

Without action, younger people may inherit lower economic growth while shouldering the cost of more retirees.

This underscores the urgency for adaptive policies and personal financial planning.

Navigating Financial Pressures

Gen Z faces intense financial pressures despite higher wage growth compared to other generations.

Over half report not making enough money to live the life they want, with high living costs as a main challenge.

Financial challenges include a sense of falling behind parents in meeting goals, felt by 32% of Gen Z.

Wage growth has provided some buffer against inflation, but it’s not enough to fully offset these pressures.

Practical steps like budgeting and investing early can help mitigate these issues.

This table highlights the disparities and needs across generations.

Labor Market Realities for the Young

Gen Z’s entry into the labor market is fraught with challenges, including high unemployment and underemployment.

Unemployment for Gen Z households grew nearly 32% year-over-year in February 2025, four times the rate of Gen X.

Education versus employment mismatch is a critical issue, with many young workers taking any job available.

Despite higher education levels, Gen Z faces structural barriers that lead to underemployment.

This calls for reforms in education-to-work pipelines and job creation initiatives.

• New entrant unemployment was up over 9% year-over-year in February, peaking at 29.4% in October 2023.
• Underemployment rates surged in March, indicating a low-churn labor market.
• Businesses risk losing institutional knowledge as older generations retire.

Addressing these gaps is essential for economic stability.

Broader Economic Implications

Demographic shifts toward aging populations will slow growth in hours worked and reduce GDP per capita if unaddressed.

The age mix change could reduce GDP per capita growth by an average of $10,000 in Western Europe by 2050.

This represents a 0.4 percent drag on GDP per capita growth per year, with regional variations.

In Latin America, 63% of countries may grow below potential in 2026, aging before achieving comparable wealth.

Solutions must include productivity enhancements and adaptive workforce strategies.

• Hours per capita could decrease by 2.2 hours weekly in first-wave economies from 2023 to 2050.
• Social Security and Medicare strains may require channeling 50% of labor income to fund senior gaps.
• Younger societies need job creation, while older ones focus on productivity.

These impacts highlight the need for global cooperation.

Transforming Industries and Markets

Gen Z will redefine consumer trends, reshaping entire industries and creating new ones that don’t yet exist.

Traditional sectors like physical retail and conventional banking face profound disruption from digital preferences.

Companies must embrace digital transformation and authentic sustainability to stay relevant.

This generation’s values-driven spending will influence market dynamics for years to come.

Embracing innovation can turn challenges into opportunities for growth.

• Industries at risk include those resistant to digital adoption and environmental concerns.
• New markets may emerge in tech, green energy, and experiential services.
• Consumer loyalty will hinge on transparency and social responsibility.

Adapting to these changes is key to long-term success.

Policy Imperatives for a Balanced Future

Confronting demographic consequences requires rethinking long-standing work practices and social contracts.

Societies must consider raising fertility rates, increasing migration, and boosting productivity to ensure prosperity.

Effective strategies should be built on pillars of innovation, inclusivity, sustainability, and resilience.

No single solution is enough; a combination of approaches is necessary to counteract growth slowdowns.

Policymakers and individuals alike have roles to play in shaping a resilient future.

• Higher productivity through technology and training can offset labor shortages.
• Inclusive policies that support women and younger workers are crucial.
• Sustainable practices will attract Gen Z consumers and investors.

By acting now, we can turn demographic shifts into engines of economic renewal and hope for all generations.